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France Telecom bids for outstanding Wanadoo shares

Broadband at 'heart of strategy'

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France Telecom (FT) wants to acquire the outstanding shares in its ISP division, Wanadoo, in a bid to cash in on future revenues from the growth in broadband.

Like other incumbent telcos, FT's traditional voice revenue streams are being squeezed and it reckons that broadband is one area where it can generate new revenue growth.

Announcing its intention to purchase the minority interests in Wanadoo (29.4 per cent) FT said it was prepared to offer €8.86 per Wanadoo share, a premium of 17.2 per cent on the closing share price on Friday.

The closing date for the public offer is April 13.

As part of the strategy it wants to re-integrate the Wanadoo ISP (which has operations in a number of European countries including the UK) within the FT business with an eye to develop "targeted offerings" with integrated voice/data/image services. Its view is that broadband is moving beyond plain old Internet access and could end up generating revenues from combining voice, TV, video, videophony and games.

In a statement FT chairman and CEO Thierry Breton, said: “This transaction constitutes a major step in the implementation of our vision of the client at the centre of his communication universe and is a step further in our development as an integrated operator and in line with our ambition to become the best European operator.

"The development of broadband is in the process of profoundly changing the usages of our customers. Broadband is thus at the heart of our strategy."

Another telco with broadband at its heart is BT. Publishing its latest set of figures earlier this month the UK's dominant fixed line telco said that the increasingly rapid uptake of broadband and other "new wave" technologies had helped it increase pre-tax profit.

While the telco's traditional business is still in decline, courtesy of increased competition and regulatory intervention, BT's "new wave" business continued to thrive.

New wave turnover - which includes revenues from Information and Communications Technology (ICT), broadband, mobile and managed services - jumped 31 per cent to £838 million, compared to a 25 per cent increase in the second quarter. Broadband revenues increased 129 per cent to £128 million.

Last week we reported that the European Commission is to keep a close eye on Wanadoo's accounts until the end of 2006 following allegations of predatory pricing against the French ISP.

According to reports the Commission has ordered Wanadoo to hand over accounts for surveillance in order to prevent any further abuse of its dominant position. ®

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